How to Track Cumulative Dividends on Preferred Stock

How to track cumulative dividends is the unpaid overlay you keep after you already logged the preferred series: rate, compounding versus simple, when the accrual is payable, start date, accrued unpaid balance, and whether anything was declared. Raziel's participating preferred tracking page is leftover proceeds after the preference. Raziel's PIK interest tracking page is a loan coupon that capitalizes to principal. This page is the preferred-stock Accruing Dividends row, copied from the charter, not a PIK coupon and not participation.

This is not legal, tax, or investment advice. Raziel does not provide it. Copy the signed certificate of incorporation. NVCA's model-documents page: the forms present potential options and are a starting point only. Do not invent a rate, a compounding interval, or a payment trigger.

What this ledger is (and is not)

The NVCA October 2025 Model Certificate of Incorporation prints three labeled Section 1 dividend instructions. The first is no specific preferred dividend, with equal sharing if dividends are declared on Common. The second is a specified Dividend Amount, payable only when, as, and if declared; that block says the right "shall not be cumulative, and no right to dividends shall accrue to holders of Preferred Stock by reason of the fact that dividends on such shares are not declared or paid." The third is a specified cumulative dividend, payable if and when declared. Copy the filed block. If the signed charter is non-cumulative, keep accrued unpaid balance blank. If there is no specified dividend, log none.

Carta's liquidation-preferences page (modified April 29, 2026): preferred dividends are designated cumulative or non-cumulative. Cumulative dividends "are earned and accrued over time, whether or not it is declared by the board." Non-cumulative dividends "are declared and paid out only at the discretion of the board" and "do not accrue to shareholders in the way that cumulative dividends do." Cooley GO calls the overlay "accruing dividends" and, in Negotiating Term Sheets (last reviewed January 23, 2022), says dividends can often be de-prioritized "except for accruing dividends." Cooley GO's down-round article (Derek Colla; last reviewed January 24, 2022) lists accruing dividends separately from participating preferred.

Seven columns on one series row

Open one row per preferred series you hold. Copy each field from the signed COI.

• Series. Legal series name as printed (Seed, A, B, and so on). Do not merge series with different dividend language.

• Cumulative versus non-cumulative (copied). The Section 1 block in the charter you signed, not a platform default. NVCA footnote 11: the model prints three bracketed alternatives. Carta: cumulative accrues whether or not declared. Non-cumulative does not.

• Annual rate and whether it compounds. NVCA's printed cumulative block accrues "at the rate per annum of $[___] per share." NVCA footnote 15: a dollar-per-share rate "will by definition be non-compounding." Compounding, if used, is a percentage of a base amount defined as original purchase price plus previously accrued dividends, with the interval specified (annual, quarterly, or other).

• When it is payable (liquidation, redemption, conversion, declared only). NVCA's cumulative block: Accruing Dividends "shall be payable only when, as, and if declared by the Board of Directors" except Section 2.1 (liquidation) and Section 6.1 (redemption) if those brackets are inserted. Footnotes 19 and 91 add Accruing Dividends accrued but unpaid, whether or not declared, to Original Issue Price on liquidation and redemption. Printed conversion (Section 4.2.1) pays "all declared but unpaid dividends." Footnote 64: some terms instead pay all accrued dividends, whether or not declared, in additional Common. Copy the signed triggers.

• Start date. NVCA cumulative block: "From and after the date of the issuance of any shares of Preferred Stock." Carta: typically from the shares' issue date.

• Accrued unpaid balance you keep. The running tab as of a dated as-of, using the copied rate and compounding rule, minus amounts already paid. Carta: accrued dividends are added to the investor's liquidation preference at exit when the charter works that way. Accrued is not cash received and is not PIK principal on a loan.

• Last declaration or payment date. Board declaration date, payment date, or none. If nothing was declared, store none and the date you checked.

Accrued is not paid until the charter says so

NVCA's cumulative block: Accruing Dividends "shall accrue from day to day, whether or not declared, and shall be cumulative." Accrual without a trigger is still an unpaid overlay. Carta: typically only payable if and when declared by the board, even while they accrue. Do not book the running balance as a cash coupon or as PIK principal.

On a sale or Deemed Liquidation Event, the overlay sits inside the preference math only if Section 2.1 includes Accruing Dividends. Participation, if any, is a leftover claim after that preference. On conversion, do not assume the unpaid balance survives. NVCA footnote 60: using Original Issue Price in the conversion formula means accruing dividends are not taken into account in a conversion unless a separate payment clause says they are.

When the overlay holds

The row holds if cumulative versus non-cumulative is copied from Section 1, the rate and compounding rule match the charter, payable triggers are liquidation, redemption, conversion, and/or declared only as printed, start date is issuance, accrued unpaid balance is dated, and last declaration or payment is a real date or none. It fails when you paste a compounding form onto a dollar-per-share block, treat undeclared accrual as cash, mix this overlay into PIK principal, or collapse it into participating preferred. Raziel's startup investment tracker is the book those preferred rows already sit on: cash dates, documents, cap tables, IRR and MOIC. Raziel does not interpret your charter. Copy the seven columns.